Often referred to as the “poor man’s gold,” Silver has been in existence since 2500 BC. First discovered in Turkey, the white metal was used in making jewelry, household items and as a medium of exchange.
A precious metal of choice for investors worldwide, Silver’s malleability and excellent conductivity makes it valuable in electronics, solar and green energy equipment. From circuit boards in Televisions and mobile phones to RFID tags and children’s toys, silver has become an irreplaceable metal. The industrial uses of Silver in Electric Vehicles, solar panels and other related sectors lead to an increased demand for Silver.
Silver is also a tangible asset with properties of being a safe haven owing to its low correlation with equities and bonds. The low correlation means that Silver helps smoothen out portfolio volatility, especially during times of elevated geopolitical or financial stress, when other asset classes tend to perform poorly. But if we’re thinking of ‘Silver’ as a commodity that offers the same level of safety that Gold does, we might want to reconsider our options. While both Silver and Gold act as a hedge against inflation, Silver is slightly volatile as compared to Gold and carries a moderately weak positive correlation to the equity markets. As an investor it’s important to understand the subtle differences between investing in the precious metals market.
The prices of the white metal have soared since March 2020, with the metal outperforming many other commodities fueled by a surge in demand. Other factors that drive the demand for Silver include investment demand, industrial demand and macroeconomic factors. One of the most significant factors that generate demand for Silver are its dual usage as a precious metal in addition to its industrial demand.
In the Indian markets silver holds a unique position due to its multifaceted uses, historical significance and spiritual value. India is one of the largest consumers of silver globally, with its demand and supply being influenced by global prices, domestic economic conditions, and seasonal demand during festivals and weddings.
Silver prices hit lifetime high level of ₹ 97,000 in the local market on May 21, 2025, even as the gold prices continued to rise owing to a choppy market. Yes, silver glitters as much as gold right now! In fact, the silver prices have almost doubled over the past 5 years. However, in 2024, was an exceptionally year with the prices witnessing a massive spike. Multiple factors led to this uptick in the prices of silver a few of which we’ve outlined below.
Industrial Demand: Silver’s thermal and electrical conductivity make it essential in variousindustries such as electronics, solar panels, and automobiles. An increase in demand from these sectors led to a rise in the price of silver.
Solar Rooftop Scheme: Silver is a key component in solar panels. The interim budget proposed a significant boost to the rooftop solar segment through the Pradhan Mantri Suryodaya Yojana. This initiative aims to enable 10 million households to receive up to 300 units of free electricity every month, backed by an allocation of Rs 10,000 crore. This policy has significantly contributed to the increased demand for silver.
Others: Silver is also utilized in photography, solder and brazing alloys, dentistry, glass coatings, medicine and pharmaceuticals, nuclear reactors, semiconductors, touch screens, water purifiers, RFID chips for tracking parcels, and jewelry.
Global Factors: Factors influencing gold prices similarly impact silver prices. The strength of the US dollar and changes in the Federal Reserve’s interest rates can affect silver’s value. Geopolitical issues, such as the Russia-Ukraine war and the Red Sea Crisis, also impact global trade, often leading to fluctuations in silver prices.
While we’ve established the importance of Silver, it’s important to look at and understand the various modes using which we can invest in Silver. While some traditional modes of investing in silver continue to remain in vogue, digitization has become the norm over the recent years.
Physical Silver: Buying and storing physical silver has practical limitations, including concerns about storage, liquidity, security, tarnish, damage, and transportation.
Digital Silver: Investing in digital silver allows you to hold silver in a demat (dematerialized) account, eliminating the need for physical possession.
Silver Futures: You can trade silver futures on commodity exchanges like the Multi Commodities Exchange of India (MCX) and the National Commodities & Derivatives Exchange (NCDEX). This method allows investors to speculate on the future price of silver without physically holding it.
Silver ETFs: Silver Exchange-Traded Funds (ETFs) primarily invest in silver and track its market price. The Net Asset Value (NAV) of these funds fluctuates with silver prices. Typically, 95% of the fund’s assets are invested in silver and silver-related instruments, with the remaining balance in cash and cash equivalents. Investments in ETFs can be made through a demat account.
Silver Mutual Funds: Silver mutual funds, specifically Fund of Funds (FOFs), invest in silver ETFs, which in turn invest in physical silver. As the price of silver rises, the NAV of these mutual funds also increases.
Investing in silver offers a unique opportunity, and benefit from its industrial demand. With its historical significance and robust market in India, silver stands out as a compelling investment choice. So, we recommend having a 10% to 15% investment in Silver across your portfolio.
